Forum Markets, Incorporated Common Stock 2026 Q2 Earnings Call

Thank you, Megan. Hello, and thank you all for joining Forum's second quarter 2026 financial results conference call. Joining me on the call today are McAndrew Rudisill, Chairman and Chief Executive Officer, and John Saunders, Chief Financial Officer. We hope you've had the opportunity to review our second quarter financial results issued earlier this morning. We've also posted an earnings presentation to our investor relations website. As a reminder, some of the matters we'll be discussing on this morning's call are forward-looking in nature. Please keep in mind that actual results could differ materially from what is expressed in these forward-looking statements. Forum assumes no obligation to update the information, and we encourage you to refer to our most recent filings with the SEC for a discussion of factors that could cause actual results to differ materially from these statements.

During our call today, we may reference certain non-GAAP financial measures, which we believe provide meaningful information for investors. A reconciliation of these non-GAAP measures to the corresponding GAAP measures can be found in our press release and presentation, both available on our investor relations website. With that, I'll turn the call over to McAndrew.

Thank you, John, and good morning, everyone. Thank you for joining us. Since our last call, we have continued to execute against Forum's operational strategy while taking a disciplined approach to allocating shareholder capital. We are building Forum by combining deep operating experience with disciplined capital allocation. Operationally, our focus is on acquiring and managing cash-flowing assets with attractive risk-adjusted returns in large scalable markets with moderate to high complexity and durable demand. Our assets are intended to generate cash flow first, with the option to tokenize on regulated digital infrastructure second as the market for tokenized real-world assets grows over time. On the capital allocation side, we took decisive action in the quarter to return value to our fellow shareholders.

Given the disconnect between Forum's market value and what we believe is the intrinsic value of the company, we determined that repurchasing a large percentage of our stock represented the most attractive use of capital available to us. During the quarter, we repurchased approximately 7.1 million shares, about 35% of our shares outstanding prior to those repurchases. All shares acquired under the program have been retired. Our second quarter results reflect a deliberate capital allocation decision. We chose to deploy a meaningful amount of capital allocated towards share repurchases rather than acquire additional revenue-producing assets based on our view of the value that was available in our shares. We evaluate capital allocation continuously, and we will keep directing it to where it earns the best risk-adjusted return for shareholders.

With that discipline in place, our near-term core focus is anchored on deploying capital into cash-generating assets and growing revenue in the second half of the year, which John will cover in more detail. Turning to the board special committee, we believe the process has advanced meaningfully since our last call, and we are encouraged by the quality and level of engagement we have seen to date. The committee continues to evaluate each opportunity against a clear standard: which path best maximizes long-term value for Forum shareholders. While we cannot comment on specific discussions, potential counterparties, or transaction timing, we expect to be in a position to provide shareholders with a meaningful update prior to our next earnings call. Management remains fully focused on operating the business and strengthening our fundamentals in the meantime.

On the asset side, even accounting for capital deployed towards repurchases, we continue to expand our portfolio of income-producing tokenized real-world assets and have done so at an accelerating pace since quarter end. Most recently, we acquired two additional commercial aircraft engines, bringing our aviation portfolio to five engines under long-term lease to two of the largest U.S. airlines. Both engines were already on lease and generating contracted revenue at the time of purchase, and we are targeting double-digit annual returns on the pair. John will cover the financial specifics in his remarks. Commercial aircraft engines are representative of the types of high-quality tokenized real-world assets where proprietary deal flow, networks, and structuring create investment opportunities that are not broadly accessible through traditional public markets. Exactly the profile we look for.

We also continue to advance our AI infrastructure vertical and access constrained market where we see attractive opportunities to generate great returns and durable cash flow. Our initial work in short-term GPU financing helped surface adjacent opportunities within the same ecosystem, including the deployment and operation of AI equipment across data centers and inference compute locations, generating revenue from the compute. We are now close to deploying capital into AI infrastructure in the area of AI compute, which we expect to contribute meaningfully to the revenue in the second half of the year. We also continue to evaluate opportunities in short-term GPU financing with partners that align with our operational compute model. We believe aviation and AI infrastructure are particularly attractive areas for near-term expansion because both combine substantial capital demand with specialized origination requirements and access-constrained investment opportunities.

At the same time, we have built origination capabilities across all four of our core verticals, and overall deal flow has accelerated meaningfully in 2026. That has broadened the range of opportunities available to us and allows us to be highly selective on structure, counterparties, and risk-adjusted returns. Manufactured housing and auto credit round out the platform by providing additional sources of secured cash-generating assets. These categories reflect prioritization of assets that generate attractive income, are backed by tangible collateral and strong off-take counterparties, and can create additional value through origination, management, and distribution over time. We will continue to deploy capital selectively where we see the strongest risk-adjusted returns, with a particular focus on markets where our capabilities can improve capital formation.

This multi-channel model supports several distinct sources of value, including yield on assets held by Forum, origination and structuring economics, asset management fees as third-party capital participates, and distribution or marketplace economics as those channels mature. In addition, Liquidity.io remains a part of Forum's long-term tokenization strategy, and its platform upgrade is expected to significantly broaden its capabilities during the second half of 2026. However, I want to reiterate that our first priority is to build a portfolio of high-quality operating businesses with cash-generating assets while maintaining the option to tokenize and distribute as market demand grows over time. We believe Forum has built a differentiated base of income-producing assets, proprietary origination relationships, and distribution capabilities, and we remain focused on increasing the value of that platform and ensuring that value is created for shareholders. With that, I'll turn the call over to John.

Thank you, McAndrew, and good morning, everyone. Before reviewing the quarter, I want to briefly reiterate the financial framework we use to evaluate Forum's progress. At this stage, the most relevant measures are the size and composition of our income-producing asset base, the yield and cash flow generated by those assets, our origination and management economics, and net asset value per share. Tokenization remains an additional distribution and liquidity option, but the underlying assets do not need to be tokenized to generate revenue or create value for Forum. Turning to the second quarter, Forum generated revenue of approximately $1.4 million, compared with $2.9 million in the first quarter of 2026. Revenue during the quarter was driven primarily by aircraft lease revenue of approximately $1.4 million. Manufactured housing and auto credit interest income was approximately $0.38 million, and interest in other financing income of approximately $0.42 million.

The decline in revenue from Q1 was due to the elimination of $1.8 million in staking revenue, resulting from the strategic decision to sell the majority of our Ethereum holdings in March as we transition to our current operating model. Results for the quarter also reflect, in part, our decision to allocate capital into share repurchases rather than additional revenue-generating assets. Our revenue mix is becoming increasingly representative of Forum's current operating model of contracted asset income, financing yield, and, as the platform scales, origination, structuring, and management fees. General and administrative expenses were approximately $10.3 million for the quarter, compared with $7.5 million in the first quarter.

General and administrative costs included non-cash stock-based compensation expense of approximately $3.8 million, and one-time cash charges of $1.8 million, consisting of an early termination fee to exit our asset manager agreement and taxes paid in the U.K. to settle a VAT repayment liability associated with exiting the legacy biotech business. We continue to invest in the personnel, systems, underwriting capabilities, and partnerships required to support platform growth while maintaining a disciplined approach to operating expenses. Net loss from continuing operations for the quarter was approximately $12.4 million, compared with a net loss of $77.5 million in the first quarter. Adjusted EBITDA loss for the quarter was approximately $7.4 million, compared with an adjusted EBITDA loss of approximately $76 million in the first quarter. The first quarter results included substantial digital asset-related losses associated with the final repositioning of the balance sheet.

The second quarter results provide a meaningfully cleaner view of our operating expense structure and the income generated by our real-world asset portfolio. Turning to the balance sheet, as of June 30, 2026, Forum Markets reported total assets of approximately $159.1 million, with cash and cash equivalents and marketable securities of approximately $48.4 million. Our quarter-end asset base included approximately $16.7 million of commercial aircraft engine assets, $14.7 million of manufactured housing loans, $2.5 million of auto loans and warehouse financing assets, and $45.7 million of strategic equity investments. Subsequent to quarter end, Forum Markets deployed approximately $23.7 million in cash to acquire two additional commercial aircraft engines, both of which were already generating contracted lease revenue at the time of acquisition. Those assets are not reflected in the June 30 balance sheet.